Chesire’s Dechra could fall out of FTSE 100

Chesire-based international veterinary drugs giant Dechra Pharmaceuticals is currently a contender to be relegated from the FTSE 100, according to Hargreaves Lansdown.

The FTSE All Share Index Quarterly Review will be based on market capitalisations on Tuesday, November 29.

Dechra shares are down about 44% year to date, giving the firm a stock market value of about £3.1 billion.

Susannah Streeter, senior investment and markets analyst Hargreaves Lansdown, said: “Dechra Pharma is in the business of keeping animals healthy throughout their lifetimes and was helped by soaring popularity for new furry additions to the household during the pandemic.

“The company has benefited from robust organic growth and has been on a spending spree in the US acquiring two firms, Piedmont Animal Health and Med-Pharma.

“But Dechra has also been caught in the claws of worry about inflation.

“Additional costs have weighed on the business which has dented profits and a share placing to fund acquisitions has also diluted earnings per share growth.

“Although demand for the pharmaceutical company’s veterinary products has been reasonably strong, there have been worries that with incomes facing a squeeze, spending per head could decline.

“Shares have fallen by more than 20% over the past year as worries about growth prospects have risen, and it looks likely to drop out of the top league.

“However, demand for pets doesn’t seem to be waning just yet which should make future revenues streams reasonably resilient as long as new product pipelines don’t get blocked.”